China Shoe Plant Strike Disrupts Output at Nike, Adidas Supplier

Workers at Nike Inc. (NKE) and Adidas AG (ADS) shoe supplier Yue Yuen Industrial Holdings Ltd. (551) in Dongguan, China struck for a third day seeking a 30 percent pay increase and better benefits, disrupting output.

The number of striking workers increased today, a spokesman for Hong Kong-based Yue Yuen said, without estimating the number of strikers or affect on production. He asked not to be identified because of company policy. New York-based China Labor Watch estimated strikers at 30,000.

The shoemaker is negotiating with local government officials who are representing the employees, who have declined to have the factory union negotiate for them, according to the spokesman. The strike at Yue Yuen, which also supplies Puma SE and Asics Corp., follows work stoppages at Wal-Mart Stores Inc. and International Business Machines Corp. this year as workers demanded better compensation.

Photos released by China Labor Watch today show police, some with riot shields or guard dogs, at the factory complex. The labor-advocacy group estimated that about 1,000 policemen were outside the factory doors. Repeated calls to Dongguan’s police bureau reached a busy signal.

Adidas is “closely monitoring the situation” at the factory, Katja Schreiber, spokeswoman for the company, said by e-mail today.

Photographer: Nelson Ching/Bloomberg

Adidas AG's supplier there is in discussion with the local government to seek ways of addressing the workers’ concerns. Close

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Photographer: Nelson Ching/Bloomberg

Adidas AG's supplier there is in discussion with the local government to seek ways of addressing the workers’ concerns.

Nike “is concerned by the events” and is monitoring production and the dialog between factory management and workers, Greg Rossiter, a spokesman for the Beaverton, Oregon-based sporting goods company, said in an e-mail.

40,000 Workers

Yue Yuen fell 1.7 percent to close at HK$25.85 in Hong Kong trading, while the benchmark Hang Seng Index climbed 0.1 percent.

The Hong Kong-based shoemaker said yesterday more than 1,000 factory workers took to the streets in protest, demanding better benefits, before being stopped by local police. The facility employs about 40,000 workers, some of whom were “involuntarily involved” in the strike today, according to the Yue Yuen spokesman, who declined to elaborate.

Social security benefits Yue Yuen offers comply with the law and there is a plan to raises incentives from May 1, the company said today.

Yue Yuen was founded in 1988 by Taiwanese owners and has factories in China, Vietnam and Indonesia, according to its website.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editors responsible for this story: Stephanie Wong at swong139@bloomberg.net Dave McCombs

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